Sorry Eddie, I disagree. With very few exceptions, any creditor always has the right to demand full and immediate repayment from the debtor. (For example, many businesses get forced into bankruptcy when their banks withdraw their overdrafts without any notice whatsoever The bank always has the right to tear up any pre-existing agreements and to demand full and immediate repayment).
However, while the council has the legal right to demand immediate repayment they will be aware of the old maxim about 'getting blood out of a stone'. If your friend states that she can't pay the money back as quickly as the council would like (but stresses that she'll continue with the present payments) she can't be successfully prosecuted (under the Theft Act 1968) for wilfully failing to repay the money. So that means that the council can either accept her offer or seek civil action (through a County Court Judgement) against here.
A lot of people get worried about the prospect of having a CCJ against them, but they're often beneficial to debtors. That's because a court will only make an order requiring the debtor to make 'reasonable' payments, depending upon their disposable income. The County Court might well decide that £20 per month (or even less) is the maximum amount which is 'reasonable'. Once a CCJ has been issued (and as long as you friend complies with it)there will effectively be nothing further the council can do to hasten the collection of the debt.
Tell your friend to write to the council, detailing her income and regular expenditure. She should also make it clear that she acknowledges the debt but, because of her limited funds, she can only continue to pay £20 per month. The council might well accept the offer but if they write to her regarding possible court action your friend shouldn't worry. The court won't order her to pay back more than she can afford.
Chris